# 12th | Volume 3 | Chapter:4 | Question No. 36 to 40 | Accounting Ratio | Ts grewal Accounts Solution 2022-2023

#### Question 36:

Calculate Debt to Equity Ratio: Equity Share Capital  ` 5,00,000; General Reserve  ` 90,000; Accumulated Profits  ` 50,000; 10% Debentures  ` 1,30,000; Current Liabilities  ` 1,00,000.

Equity = Equity Share Capital + General Reserve + Accumulated Profits

= 5,00,000 + 90,000 + 50,000 = 6,40,000

Debt = 10% Debentures = 1,30,000

Debt equity ratio= Debt /equity=1,30,000/6,40,000=0.203:1

#### Question 37:

From the following information, calculate Debt to Equity Ratio:

 ` 10,000 Equity Shares of ` 10 each fully paid 2,00,000 5,000; 9% Preference Shares of ` 10 each fully paid 1,00,000 General Reserve 90,000 Surplus, i.e., Balance in Statement of Profit & Loss 40,000 10% Debentures 1,50,000 Current Liabilities 1,00,000

Note: Either Number of shares or Price of par share is wrongly printed in the book, either of both must have been changed.

Long-Term Debt = Debentures =  ` 1,50,000
Shareholder’s Funds = Equity Share Capital + Preference Share Capital + General Reserve + Surplus
=
` 2,00,000 +  ` 1,00,000 +  ` 90,000 +  `40,000 =  ` 4,30,000

Debt-equity ratio= Long-Term Debt /Equity = 1,50,000/4,30,000 = 0.35:1

#### Question 38:

Capital Employed  `8,00,000; Shareholders' Funds  `2,00,000. Calculate Debt to Equity Ratio.

Shareholders’ Funds = 2,00,000

Capital Employed = 8,00,000

Long- Term Debts = Capital Employed − Shareholders’ Funds

= 8,00,000 − 2,00,000 = 6,00,000

Debt equity ratio= Long-term Debt /equity=6,00,000/2,00,000=3:1

#### Question 39:

Balance Sheet had the following amounts as at 31st March, 2021:

 ` ` 10% Preference Share Capital 5,00,000 Current Assets 12,00,000 Equity Share Capital 15,00,000 Current Liabilities 8,00,000 Securities Premium Reserve 1,00,000 Investments (in other companies) 2,00,000 Reserves and Surplus 4,00,000 Fixed Assets-Cost 60,00,000 Long-term Loan from IDBI @ 9% 30,00,000 Depreciation Written off 14,00,000

Calculate ratios indicating the Long-term and the Short-term financial position of the company.

(i) Debt-Equity Ratio is an indicator of Long-term financial health. It shows the proportion of Long-term loan in comparison of shareholders’ Funds.

Debt-Equity Ratio = Long Term Debts/Equity

Debt = Loan from IDBI @ 9% = 30,00,000

Equity = 10% Preference Share Capital + Equity Share Capital + Reserves & Surplus

= 5,00,000 + 15,00,000 + 4,00,000 = 24,00,000

Debt-Equity Ratio = 30,00,000/24,00,000 = 1.25:1

(ii) Current Ratio is an indicator of short-term financial portion. It shows the proportion of Current Assets in comparison of Current Liabilities.
Current Ratio = Current Assets/Current Liabilities

Current Assets = 12,00,000

Current Liabilities = 8,00,000

Current Ratio = 12,00,000/8,00,000 = 1.5:1

Note: In the above question, Securities Premium Reserve is not considered while computing Equity because it is already included in the amount of Reserves and Surplus.

#### Question 40:

Calculate Debt to Equity Ratio from the following information:

 ` ` Fixed Assets (Gross) 8,40,000 Current Assets 3,50,000 Accumulated Depreciation 1,40,000 Current Liabilities 2,80,000 Non-current Investments 14,000 10% Long-term Borrowings 4,20,000 Long-term Loans and Advances 56,000 Long-term Provisions 1,40,000